Why Write a Business Plan?
Most contractors skip the business plan — and most contractors stay small or fail. A business plan forces you to think through your market, your financials, and your strategy before you're in the middle of it.
When you'll need it:
- Bank loan or line of credit application
- SBA loan application
- Surety bonding (capacity above $500K)
- Bringing on a business partner
- Minority/disadvantaged business certification
- Investor or private equity inquiry
Even if you never need it for external purposes, the process of writing it will clarify your strategy and identify financial risks before they become real problems.
Section 1: Executive Summary
The executive summary is the first thing anyone reads and should be written last (after you know what you're summarizing).
Include:
- Company name, location, and date founded
- Services provided and target market
- Owner's experience and qualifications
- Key competitive advantages
- Revenue projections (Year 1–3)
- How much capital you need and what you'll use it for (if applicable)
Length: 1–2 pages maximum. Busy bankers and surety underwriters read hundreds of these — make it crisp.
Section 2: Company Description
Business structure: LLC, S-Corp, Partnership — and why.
Services: What do you do, for whom, and at what project size? Be specific. "Residential framing for production builders on projects of $150K–$800K" is better than "construction."
Market position: Are you the premium provider? The volume-focused efficiency play? The specialty niche? Define where you compete.
Competitive advantages: Experience, license, certifications, specialized equipment, relationships, geographic focus, price. Be honest and specific — "30 years in commercial electrical in Phoenix" is a real advantage.
Goals: 3-year company goals. Revenue, headcount, bonding capacity, geographic reach.
Section 3: Market Analysis
Target market: Commercial, residential, public works, or specialty. Define the geography (your MSA or region) and client type (GCs, developers, homeowners, municipalities).
Market size: Local construction permit values are available from your city/county or the Census Bureau. Industry data from AGC, NAHB, or ENR gives market size estimates.
Competition: Who are your top 3–5 competitors? What do they do well? Where are the gaps? Online review data, BBB, and direct observation tell you a lot.
Market trends: Growing or shrinking? What's driving demand in your area? (Population growth, infrastructure investment, housing shortage, energy transition.) Show you understand your market.
Section 4: Financial Projections
This is the section that matters most to banks and surety companies. It must be realistic — over-optimistic projections hurt your credibility.
What to include:
Revenue projections (3 years):
- Year 1: Realistic based on current backlog + pipeline
- Year 2: Growth rate based on market and capacity
- Year 3: Goal state
Income statement projection:
- Revenue
- Direct costs (labor, materials, subcontractors, equipment)
- Gross margin (typically 20–35% for construction)
- Overhead (SG&A, insurance, vehicles, admin)
- Net margin (target: 5–15%)
Cash flow projection: Month-by-month for Year 1. Cash flow is where most contractors get into trouble — show you understand the timing of billing vs. payment.
Balance sheet projection: Assets, liabilities, owner's equity. Surety underwriters look at working capital (current assets minus current liabilities) and net worth.
Pro tip: Use our Markup Calculator to verify your gross margin targets are realistic.
Section 5: Operations Plan
Project execution: How do you manage projects? What's your QC process? How do you handle safety?
Workforce: Employee count and roles (Year 1–3). How do you recruit, train, and retain skilled labor?
Equipment: What do you own, what do you rent, what do you plan to purchase?
Technology: Estimating software, project management, accounting, communication tools.
Subcontractor management: How do you vet and manage subs? What's your payment process?
Key performance metrics: What numbers do you track? (Average job margin, revenue per employee, backlog, accounts receivable days, change order rate.) Showing you track these signals management sophistication.